Tatas takes control of Air India as government completes disinvestment of national carrier

An Air India Boeing 787 Dreamliner aircraft.

Tatas takes control of Air India as government completes disinvestment of national carrier

New Delhi, January 27, 2022

National carrier Air India went back to the Tatas after more than six decades with the Government completing the strategic disinvestment of the airline here today when it received a consideration of Rs 2,700 crore from Talace Pvt Ltd, a wholly owned subsidiary of Tata Sons.

The Tatas had launched the airline way back in 1932 as Tata Airlines and operated it for two decades before it was nationalised in 1953.

The Government had, on October 8, 2021, announced that Talace, the special purpose vehicle (SPV) set up by Tata Sons, had emerged as the highest bidderfor the airline with a winning bid of Rs 18,000 crore as enterprise value (EV), marking the end of a ong and protracted disinvestment saga.

"The Air India strategic disinvestment transaction has been completed today with Government receiving a consideration of Rs 2,700 crore from the Strategic Partner (M/s Talace Pvt Ltd, a wholly owned subsidiary of M/s Tata Sons Pvt Ltd), retaining debt of Rs 15,300 crore in Air India and AIXL, and transferring shares of Air India (100% shares of Air India and its subsidiary AIXL and 50% shares of AISATS) to the Strategic Partner," a press release from the Ministry of Finance said.

Following Government's approval of the highest price bid of Talace, the Letter of Intent was issued to the winning bidder on October 11, 2021. The Share Purchase Agreement (SPA) was signed on October 25, 2021.

"Thereafter, Strategic Partner (M/s Talace Pvt Ltd), Air India and the Government worked towards satisfying a set of conditions precedent defined in the SPA including approvals from anti-trust bodies, regulators, lenders, third parties, etc. These conditions have since been met to mutual satisfaction," the release added.

Ahead of the official handover, N. Chandrasekaran, the chairman of Tata Sons called on Prime Minister Narendra Modi in Delhi here today.

The transaction is for 100 per cent shares of Air India along with its shareholding in Air India Express (AIXL) and AISATS. It does not non-core assets including land and building, valued at Rs 14,718 crore, which are to be transferred to the Government's Air India Asset Holding Limited (AIAHL).

Out of the Rs 18,000 crore, Talace has retained Rs 15,300 crore as debt, while the rest has been paid to the Centre as the cash component.

The process for disinvestment of Air India and its subsidiaries had commenced in June 2017 with the "in-principle" approval of the Cabinet Committee on Economic Affairs (CCEA).

At present, Air India has a total strength of 12,085 employees, which includes 8,084 permanent ones and the remaining as contract employes. In addition, Air India Express has 1,434 employees.


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